Breaking down the cost to build a house

Expected costs to keep in mind

1. Land

   The cost of the land on which you plan to build your new home can vary widely depending on location, size, and other factors. Before purchasing a plot of land, research the local market and work with a real estate professional to determine the fair market value. The land cost should be approximately 20% to 25% of the project's total cost.

2. Construction

   The cost of constructing a new home can vary depending on the size, design, and materials used. It's essential to work with a reputable builder who can provide a detailed estimate of the construction costs, including materials, labor, permits, and any unexpected expenses that may arise. As a rough estimate, building materials can account for approximately 25% to 30% of the project's total cost.

3. Permits and fees

   When building a new home, permits, and fees are required by local governments. These fees can include building permits, impact fees, and connection fees for utilities. As a rough estimate, permits and fees can account for approximately 2% to 5% of the project's total cost.

4. Financing

   If you don't have enough cash to pay for the construction up front, you'll need a construction loan. This type of loan covers the cost of the building process and a mortgage, which pays off the construction loan once the home is built.

5. Closing costs

   Like any real estate transaction, closing costs are associated with building a new home. These can include fees for the loan application, appraisal, title search, and more.

6. Post-construction

   After your new home is built, there may be additional costs to consider, such as window coverings, moving expenses and additional furniture. Budgeting for post-construction expenses will ensure you have a complete picture of the project's total cost.

Unexpected costs to keep in mind

1. Site preparation

   Site preparation costs can be unexpected when building a new home. This cost includes grading, excavation, and land clearing. The cost of site preparation can vary depending on the condition of the land and the location. As a rough estimate, site preparation costs account for approximately 5% to 10% of the project's total cost.

2. Changes, delays and modification

   Changes can include design modifications, material changes, delays or additional work. As a rough estimate, changes and alterations can account for approximately 5% to 10% of the project's total cost.

3. Contingency

   It's wise to include a contingency in your budget when building a new home. A contingency is an amount set aside for unexpected expenses that may arise during the building process. As a rough estimate, a contingency can account for approximately 5% to 10% of the project's total cost.

4. Landscaping

   Landscaping costs can be an unexpected expense when building a new home. It is important to understand what items are included in your negotiated price. Additional costs can include grass, trees, plants, and other landscaping features. As a rough estimate, landscaping costs account for approximately 5% to 10% of the project's total cost.

While the costs of building a new home can seem daunting, it's important to remember that the investment can pay off in the long run. In addition to maintaining their value, new homes offer modern features and amenities that save you money on utility and maintenance costs.

So, if you want to build a new home, do more research, work with trusted professionals, and make a careful budget. You can make your dream home a reality with proper planning and resources.